Bill diverting unemployment funds advances in Congress

A bill voted out of the House Ways and Means Committee on Wednesday would allow states to transfer federal unemployment insurance funds away from helping the long-term jobless and use them instead for other purposes, including tax breaks for corporations.

The legislation, dubbed the Jobs Act by its sponsors, Rep. Dave Camp, R-Mich., and Sen. Orrin Hatch, R- Utah, sets the stage to strip away insurance benefits that the long-term unemployed need, earned, and are counting on, says Christine Owens, executive director of the National Employment Law Project, an advocacy group for the unemployed.

HR 1745 would allow states to take the $31 billion allocated for these programs and spend those dollars on reducing federal and state unemployment taxes for businesses. It also would allow states to reduce the number of weeks of federally funded benefits, reduce the amounts paid, or eliminate them. One provision would allow a state to take the federal benefit funds and use them to finance its depleted unemployment trust fund rather than collect employer taxes, or use them to pay regular state benefits instead.

Camp and other proponents of the bill argue it gives states flexibility to spend current funds better, preventing "job-destroying tax hikes," and helping individuals find new jobs. They say reforms in the legislation would make unemployment benefits system work better in the long run by promoting more job search, education and training needed to help the unemployed get back to work sooner.